The U.S. dollar eased against a basket of major currencies on Monday after U.S. data showing retreating inflation and a downward revision to consumer spending dampened expectations for a swifter pace of Federal Reserve interest rate increases.
The dollar index, which measures the greenback against a basket of six major currencies, eased from an early 1-1/2-week high of 96.399 to a session low of 95.850 after the Commerce Department said consumer spending edged up 0.1 percent and the January reading was downwardly revised to 0.1 percent.
The data also showed U.S. inflation moderated last month, with a price index for consumer spending dipping 0.1 percent after nudging up 0.1 percent in January. The euro gained against the dollar to $1.1215, its highest level since March 23. The data dampened expectations that the Fed would hike rates again in April or June after hawkish remarks from multiple Fed presidents last week raised expectations for a faster pace of rate increases.
"Today's report certainly raises the question of whether the Fed can pull the trigger in June," said Kathy Lien, managing director at BK Asset Management in New York, in reference to the U.S. data.Low trading volumes likely contributed to price activity since European markets were closed for the Easter Monday holiday, analysts said. Analysts also said traders were awaiting comments from Fed Chair Janet Yellen on Tuesday,
The weak data was enough to crimp the dollar index's rally of more than 1 percent last week.
"A clearer picture of (the first quarter) is coming together now, and it's not looking like a particularly strong quarter for the U.S.," said Richard Franulovich, senior currency strategist at Westpac Banking Corporation in New York.
More U.S. economic data will be released later this week, including March non-farm payrolls and consumer confidence data.
The dollar index was last down 0.23 percent at 95.919. The euro was last up 0.39 percent against the dollar at $1.1207 , and the greenback was down 0.41 percent against the Swiss franc at 0.9731 franc.
The dollar was up 0.19 percent against the Japanese yen of 113.25 yen, but off an earlier 1-1/2-week high of 113.68 yen. On Wall Street, the benchmark S&P 500 stock index was last down 0.14 percent.